Economic Survey Series – IV

Human Capital

• Health – A significant increase in expenditure on health.
• There is increase in the share of
  • Government Health Expenditure (GHE) in the total GDP
  • GHE in Total Health Expenditure (THE)
• There was also a decline in out-of-pocket expenditure (OOPE) as a percentage of THE between FY15 and FY20.
• There is improvements in key health indicators such as Infant Mortality Rate (IMR) and Maternal Mortality Rate (MMR).

• Mental health– It acknowledges mental health for the first time.
• It states that, according to the National Mental Health Survey (NMHS) 2015-16
  • 10.6% adults in India suffered from mental disorders
  • Treatment gap for mental disorders ranged between 70% and 92% for different disorders.
• Mental health disorders can lead to productivity losses due to absenteeism, decreased productivity, disability, and so on.
• Women - India has moved from women’s development to women-led development.
• There has been over 218% increase in budgetary allocation for schemes for the welfare and empowerment of women.
• The share of the Gender Budget in the total Union Budget has increased to 6.5% in Financial Year 2025, the highest since it was introduced in Financial Year 2006
• The female Labour Force Participation Rate (LFPR) rose in 2022-2023 from 2017-2018 period.
• Women in India face the “motherhood penalty” with a drop in female labour force participation rate around childbearing years.
• It also highlights the potential of ‘care economy’ that could provide a lion’s share of jobs for women
• The economic value of care sector is two-fold
  • Increasing female labour force participation rate (FLFPR)
  • Promoting a promising sector for output and job creation.

Employment

• Job market – Services sector remains a major job creator, the construction sector has been rising in prominence lately, driven by the government’s push for infrastructure.
• Manufacturing sector employment creation has been subdued due to the legacy of bad loans & appears to have rebound since 2021-22.
• Workforce – India’s workforce was about 56.5 crore
  • More than 45% are in agriculture
  • 11.4% in manufacturing
  • 28.9% in services (13% in construction)

• Only 51% of India’s graduates are employable.
• The median age of India’s workforce is 28.
• Gig economy – Gig workforce to expand to 2.35 cr by 2029–30.
  • They are expected to form 6.7% of the non-agricultural workforce or 4% of the total livelihood in India by 2029–30.
• Wages – India has a higher overtime wage premium than most countries”, which is 100% as of now.

Overtime wage premium is the wage rate paid above the regular wage for working extra hours than normal.

• MGNREGA – It underlined that despite low poverty levels, the MGNREGS funds usage in Tamil Nadu and Kerala was higher than that in Bihar and Uttar Pradesh.
• Its demand are not a real indicator of rural distress.
• MGNREGS fund usage and employment generation were not proportional to poverty levels.
• AI - Widespread adoption of AI across the services sector can significantly reshape and even replace jobs.

Industries

• MSME – Micro, Small and Medium-scale Enterprises face challenges, including
  • Issues with formalisation and inclusion
  • Limited access to finance, markets, technology, and digitalisation
  • Infrastructural bottlenecks, and skilling,

• Corporate sector – Profits had quadrupled between financial years 2019-20 to 2023-23.
• Hospitality sector - India saw 92 lakh foreign tourist arrivals in 2023, thus has earned foreign exchange receipts amounting to over ₹2.3 lakh crore through tourism.
• Tourism sector represents relatively low hanging fruit for job creation.
• Insurance – Agriculture insurance, accounting for about 12% of the non-life insurance market, witnessed flat growth in FY23.
• Agriculture insurance sector to grow post-2024 with 2.5% premium growth, supported by technological advancements and government initiatives.
• It also highlighted door-to-door enrolment initiatives aimed at making crop insurance more accessible to farmers.

Energy and Power

• Energy – It can move mountains for every aspect of development.
• Energy has strong positive correlation with economic growth, access to education, improved health, availability of water, nutrition, infrastructure, and even life expectancy.
• Power – The intermittency of renewable energy sources and the lack of viable battery storage technologies are inherent limitations, requiring coal to remain essential to ensure power grid stability.
• Green transition – The associated costs for green transition increase the price of a ‘round-the-clock’ energy supply through renewable sources.

Trade and Supply Chains

• Arms Trade - India has transitioned from being an arms importer and found a place in the list of top 25 arms exporter nations.
• About 100 domestic companies are exporting a wide range of defence products and equipment.
  • Dornier-228 aircraft, artillery guns, BrahMos missiles, Pinaka rockets and launchers, radars, simulators, and armoured vehicles.
• While defence exports have gone up, India continued to remain the world’s top arms importer in the period 2019-23.
• China plus one strategy – India may gain more from Chinese FDI than import reliance in tapping China plus one strategy.
• It refers to a supply chain strategy that encourages companies to minimise their supply chain dependency on China by diversifying the countries from which they source parts.
• Protectionist measures - It has noted that the forthcoming Carbon Border Adjustment Tax (CBAT) mooted by the European Union “went against the spirit of the Paris Agreement.”
• CBAM are tariffs that will apply on energy-intensive goods imported into the European Union.
• Near end of globalisation – The idea of economic globalisation has run its course and it may not be reversed fully.

Infrastructure

• Railway safety – Capex deployment in railways has increased by 77% over past five years.
• It indicates limited progress on safety-related works such as deployment of automatic train protection system Kavach and overhaul of signalling systems at all stations.
  • It observes out of 17 operational railway zones in India, eight zones have become free from mechanical signalling.
• Shipping sector - A total of 39 shipyards have registered, and 18 shipyards utilised the benefits under the Centre’s scheme to provide financial support to Indian shipyards.
• This is applicable for shipbuilding contracts signed between April 1, 2016, and March 31, 2026.
• Indian airlines – While the number of airports in India has doubled since 2014 from 70 to over 140, there was a need to further augment this capacity.
• It calls for the need to add ‘more airports as well as expansion/upgradation of existing airports in the next five years’.

Case Studies

• It Lauds success stories as case studies to be emulated by others

Environment

• Sustainable Development - India's path to SD has challenges in twin imperatives of meeting
  • Burgeoning energy demands
  • Reducing carbon emissions.
• Green Steel – It will play an important role in reshaping the future of the industry as the world moves towards a low-carbon economy.
• India remained a net importer of steel during the first, second and third quarters of FY24.

Recommendations

• Strengthen governance – Government's focus must shift to bottom-up reforms to ensure that the structural reforms of the past decade result in strong, sustainable, balanced, and inclusive growth.
• Health – A proper implementation of healthcare programmes to accelerate improvements made in mental healthcare.
• Skilling – Learning outcomes shall be synched with skilling outcomes and emphasis on both skilling and reskilling of the labour force to support growth.
• Employment – The tendency of labour to migrate back to farming during the pandemic has to change and larger employment should come from manufacturing rather than construction sector.
• India need to create productive jobs outside of agriculture, especially in organised manufacturing and services.
• Indian economy must generate almost 78.51 lakh jobs annually in the non-farm sector.
• Labour laws – It need to re-evaluate incentives for employers, with a focus on achieving better outcomes for economic growth and prosperity in the manufacturing sector.
• Implementing more flexible labour laws could unleash substantial economic potential, promote gender inclusivity, and attract industrial investment.
• Investment – The centre, states and private sector need to work together by a tripartite agreement to improve investment and to diversify it across sectors.
• Green transition - The nation needs to be cognizant of the changes taking place and ensure that the problems do not blow over.
• Strategic investments in R&D are crucial for a smooth transition to low-carbon development strategies.
• Agriculture – Farmers need to grow more of oilseeds and pulses given the monsoon vulnerabilities that remain.
• Supply chains – The Centre is advised to allow substitution effects to play out before responding to domestic supply concerns.
  • For example, if sugar prices rise, consumers can consume less of it or switch to jaggery.
• Environment – Diversify energy portfolio to achieve ambitious growth targets while adhering to climate commitments.
• It calls for a more balanced approach to climate change, by focussing on nearer-term policy goals of improving human welfare rather than being excessively preoccupied with long-term global climate management.